The Catalyst Code

This post originally appeared as a Harvard Business Online Conversation Starter.

The two leading financial newspapers have just hiked their newsstand prices. The Wall Street Journal will go from $1.00 to $1.50 for its weekday paper and the Financial Times will add another 30 pence to the £1 it charges for its weekday edition. The spin that many have accepted is that, in the age of free content, readers of financial news are still willing to pay for quality information. It’s further proof, they say, that Rupert Murdoch is right to offer more than $6 billion for that premier financial news provider, Dow Jones, the WSJ’s parent, even though newspapers generally seem to be spiraling.

Perhaps. But it might also be a desperate move in the face of plummeting ad revenues. Newspapers are catalyst businesses that use content to bribe readers and then charge advertisers for access to those readers. The reason newspapers are so cheap is that their real business is assembling audiences for advertisers. As advertisers become less interested in the printed medium, newspapers are naturally thinking about how to get more money from the readers. But it seems to me that’s a slippery slope.

As newspapers raise prices, they discourage readers. And with fewer readers, they get fewer advertisers. If these papers really had the courage of their spin, they would have raised their prices to a nice round number like $2 and £2. As we all know from the change bins that have become popular at Starbucks and other places, lots of people view loose change as bothersome. Now, instead of giving the cashier a quick buck for the Journal, I have to give her $2 and wait around for the 50 cents in change which I don’t want anyway. To me, that’s a pain — I’d rather just hand over the $2 and be done with it. Thanks to the WSJ, each of us will be spending a bit more time at the newsstand waiting for change that we really don’t want or standing behind someone who is waiting for her change. Of course, maybe this inconvenience — not the price — will be enough to make me just go online for my news.

What do you think of the price raise?